A cost driver should be measurable and have an economically plausible relationship with the dependent variable which means:
A) that the cost driver can be identified in an economically feasible way
B) that the relationship is based on correlation
C) that the relationship is based on a cause -and-effect criterion and makes economic sense to management
D) that the relationship must be based on a physical relationship

Question

Quizplus · Accepted Answer

A cost driver should have a cause-and-effect relationship with the dependent variable and make economic sense to management. It should also be measurable and identifiable in an economically feasible way. Correlation alone is not enough to establish a cost driver, and it does not need to be based on a physical relationship.

A Cost Driver Should Be Measurable and Have an Economically